You might have to think twice about your interactions with friends and family on Facebook. Financial lending companies are utilizing new methods to gauge whether an individual is a safe borrower, by checking who they are friends with on Facebook.
The adage “birds of a feather, flock together” applies to acquiring credit on new levels. Connections on Facebook, especially individuals that you interact with frequently can make or break your chances of being approved for a loan. One particular company that uses this practice is Lenddo. It checks if you are friends with someone who late with paying back loans.
Lenddo co-founder and CEO Jeff Stewart discussed the reasoning behind his company’s methods, “It turns out humans are really good at knowing who is trustworthy and reliable in their community. What’s new is that we’re now able to measure through massive computing power.”
Another tech startup Kreditech takes it to another level when processing a loan application. The approval process is based on 8,000 data points from many different areas. On top of Facebook, data is used from eBay and Amazon accounts to determine if an individual is a good borrower. The online application itself is another source of data points. When you spend time reading information about loans on Kreditech site your chances for approval improve. Your chances go down however if you fill out the application in all caps or no caps, small minor details.
More and more tech startups are coming around using social media as a factor to lend. Do you think social media and online accounts like PayPal and eBay should be a factor with your FICO score? Would you start watching your social connections more closely being your financial future could be determined by them?